Best practices

By Lauren Duensing

February 2011-Access to accurate, comprehensive information is necessary to the success of any manufacturing company or metals service center. Obtaining this information in a quick, timely fashion allows decision-makers to be proactive about controlling costs, optimizing efficiencies and, ultimately, improving profitability.

In a presentation given at the SAP World Tour in Chicago, Sept. 22, 2010, Glenn Sawyer, regional director for SAP advance process and manufacturing, Canada, and Adel Khan, solution engineer for SAP USA, pointed out companies should take a look at whether they're spending resources digging out of issues, such as customer complaints, supply chain management, manufacturing execution on the plant floor, employee issues, and asset utilization and optimization. Khan and Sawyer noted installing a system like SAP's Manufacturing Integration and Intelligence connects shop floor systems and provides "end-to-end supply chain visibility and control."

Joyce Swanke, industry principal for SAP America Inc., Newton Square, Pa., says the company's ERP system (part of SAP Business Suite) is its "core solution, which would have functionality for sales, finance, procurement, manufacturing plant maintenance--everything you'd need to run a business. Included in that, we have an industry-specific functionality based upon best practices and driven through requirements from our customers and implementation partners. Our core products have best practices for 28 industries. For a metals company, we provide the capability to manage products throughout the supply chain using attributes and characteristics."

Real-time inventory
For service centers, installing this type of system allows companies to automate transactions and provides quicker access to inventory. For example, customer service representatives at a metals service center shouldn't have to search several screens to find materials to satisfy orders, Swanke says. Instead, length, thickness and other material characteristics can be listed on one line on the sales order. "It's very simple and fast for order entry," she says. "It allows you to look up materials with similar characteristics so you can take advantage of the inventory that you have."

The SAP system grew out of the manual order and inventory data collection that exists in many manufacturing companies. "When this started, people were using manual systems, and even today, I'm surprised to go out to companies where that is still the case," Swanke says. "People are still calling and faxing and e-mailing to place and track purchase orders. All that can be done electronically with SAP's Business Suite."

"A decade ago, there was a lot of manual work going on," agrees Siddharth Taparia, senior director, solution marketing for SAP America. "There were a lot of paper-based transactions taking place and a lot of home-grown solutions that companies had put together. Companies were starting to automate these back-office functions using SAP. People wanted to have their books closed on time, and automation made sense because it helped them expedite and reduce the number of people that were involved in collecting that data."

Implementing a repeatable process
For Ryerson Inc., Chicago, a North American distributor and processor of metals, an SAP system helped the company consolidate systems after multiple acquisitions. The company operates service centers across the United States and Canada, and it serves an expanding international customer base in China with Ryerson China Ltd. It stocks a full inventory of sheet and coil, plate, long products, stainless steel, aluminum, nickel alloys, brass and copper.

Companies like Ryerson that have employed an acquisition strategy for growth often have issues with enterprise-wide integration because of the continuing use of different financial and procurement systems among the acquired businesses. SAP's pre-tailored tools offered the company a way to combine these systems and monitor inventory availability, pricing summary and profitability, order status and sales history.

In addition, Ryerson took advantage of SAP's metals-specific software functions, which allows the company to manage products by attributes and characteristics and do entry with a minimum of part numbers.

For example, "you can put in a request for aluminum of a certain length, thickness and grade," Swanke says.

The new system also included coil optimization, which was very important to the company because it could not combine orders previously.

William Storm, senior manager IT security and compliance, Ryerson, pointed out in a customer testimonial that one of the company's goals for the installation was compliance with cost efficiencies. "Our goals were simply to reduce the amount of deficiencies as well as reduce the amount of resources we needed to maintain compliance, so as we moved toward a zero-defect, we began to see the shift in business practices." The company found that the more processes it could standardize, the more comfortable it was with its overall business strategy.

No margin for error
That comfort comes from the reduced errors and real-time visibility the systems provide.

"One of the reasons that companies are looking at business analytics applications now is they want to be able to make the decisions, and the room for error is becoming smaller and smaller," says Taparia. "Companies don't have the leeway to make wrong decisions anymore. Errors are becoming costlier, so companies want to make the right decisions. To be able to do that, they need data they can trust and data that's available at the right time in the right place. The speed of decision making is more important than ever.

"Companies want to get ahead of their competition, and analytics is one way of doing that because they provide you a way of differentiating," he continues. "Everyone can automate their systems, and they can be similar to each other, but the kind of data that you're looking at in the key performance indicators that you're tracking can differentiate you from the competition."

Improving visibility

Integrating a global supply chain can be a difficult task, especially when customers require high-end products and impeccable customer service. In a presentation, "Integrating the shop floor with the enterprise using SAP MII and BI," given by Tony Malangone, CIO of RTI International Metals at the SAP World Tour, he pointed out his company faced several challenges including optimizing management of a global supply chain and improving facility utilization.

RTI International Metals, Pittsburgh, is one of the world's largest manufacturers and distributors of titanium. It provides titanium and specialty metal mill products, extruded shapes, formed parts and engineered systems for aerospace, industrial, defense, energy, chemical and consumer applications for customers around the world. The company employs 1,750 across its three divisions (titanium, fabrication and distribution) and operates in 20 locations in the United States, Canada, Europe and Asia.

Malangone pointed out the company's goal is to be a supplier of choice for high-end diversified, value-added titanium products and services while maintaining strong financial, stringent safety, quality and environmental standards.

RTI selected SAP because it had the ability to integrate business and manufacturing functions completely, and the company received both financial and strategic benefits from the installation, including real-time visibility across multiple shop floors, support for local analytics, lean operations and Six Sigma, and greater innovation on the shop floor. Operational benefits included increased manufacturing throughput, fewer production process errors, reduced month-end close and improved plant control with automated processes and integrated data flow.

"Where we implemented the SAP Manufacturing Integration and Intelligence application, we have much more shop-floor visibility," Malangone noted. "Now we have global visibility across key supply chains including those of our largest customers." MM

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